Monday, December 1, 2014

CRM and ERP

Enterprise Resource Planning (ERP) and Customer Relationship
Management (CRM) are two sides of the same profitability coin. ERP and
CRM are similar in many ways, as they are both used to increase the
overall profitability of a business.
These systems overlap in some areas, and can be completely integrated
in others. However, as their core functionalities are completely
different, it’s best for a business to first look at them as separate,
stand-alone systems. When viewed separately, it’s easier to see how ERP
and CRM each play a role in improving efficiency and increasing sales.

What is CRM?

Simply put, CRM is a system for recording and storing all information related to customer interactions.

Simply put, CRM is a system for recording and storing all information related to customer interactions. CRM systems like Salesforce and Microsoft Dynamics CRM
provide a standardized method for collecting and sharing customer data
and cataloging customer interactions. Since all of the data is
standardized, it’s easily shared throughout the business. CRM can be
used by executives to create sales projections, by sales reps to
maintain contact with clients, by shipping clerks to verify addresses,
and by the billing department to create invoices. The goal of CRM is to
provide a comprehensive store of customer data that can be used to
increase sales, improve customer retention, and make customer relations
more efficient.

What is ERP?

Where CRM is focused on the customer, ERP focuses on the business.
ERP is a system for improving the efficiency of business processes. Like
CRM, ERP allows for the rapid sharing of standardized information
throughout all departments. Executives, managers, and employees all
enter information into the ERP system, creating a real-time,
enterprise-wide snapshot. Problems in any area will automatically create
alerts in other affected areas. This allows departments to begin
planning for issues before they become a problem in that department. In
short, by allowing the business to focus on the data, instead of the
operations, ERP provides a method for streamlining business processes
across the board. Popular ERP vendors like Epicor, SAP, and Microsoft either also make CRM software, or their ERP solutions directly integrate with CRM from other vendors.

A Distinction with a Difference

Though similar in effect, ERP and CRM systems use different
approaches to increase profits. ERP focuses on reducing overhead and
cutting costs. By making business processes more efficient, ERP reduces
the amount of capital spent on those processes. CRM works to increase
profits by producing greater sales volume. With a standardized
repository of customer data, it’s easier for everyone, from executives
to sales reps, to improve customer relations. In turn, those improved
relations translate into increased brand loyalty and profits.

CRM? ERP? Both?

ERP
focuses on reducing overhead and cutting costs. By making business
processes more efficient, ERP reduces the amount of capital spent on
those processes.

Whether a business needs both systems largely depends on the size and
complexity of the business. Even for a small business, a CRM system is
better than a haphazard collection of customer data stored on
hand-written notes, in numerous emails, or, worse yet, contained solely
in the head of a sales rep. Customer relations are the lifeblood of any
business—CRM exists to keep that blood pumping freely.
ERP is an invaluable tool for streamlining complex business
processes. Many small businesses start in a single room or small office.
All of the “departments” may be within earshot of each other. At that
point, software that can provide a real-time snapshot of every
department may be overkill. As the business grows, the need for, and
benefits of, ERP become clearer. If, at any time, a manager or executive
doesn’t know what’s going on in the departments they are responsible
for, the time for ERP has long since arrived.

Assigning Importance

Deciding which system is more important is like deciding between
having an engine or having a steering wheel in a car. CRM is the engine
that drives a business. It improves sales and increases profits. ERP is
the steering wheel—it allows a business to be guided with precision, and
to steer around obstacles well in advance. ERP and CRM working together
make it much easier for a business to increase profits while reducing
costs.

Which Comes First?

A business has to have processes before it needs to worry about
streamlining them. And it needs to have profits before worrying about
cutting costs. The most streamlined, efficient business in the world is
still bankrupt without sales. That’s why CRM is often the best bet for a
business’s first investment. Generating and maintaining sales is
usually what makes everything else possible. By helping to maximize
sales figures, CRM can enable a business grow to the point that ERP
becomes a necessity.

Maximizing Growth

Increased capital comes about in two ways: more sales or fewer
expenses. Using ERP and CRM systems allows a business to pursue both of
these avenues. The CRM system brings in more revenue through better
sales figures, while the ERP system reduces overall operating expenses.
Together, these systems can help a business pursue growth through
efficiency and expansion simultaneously. Used separately, ERP and CRM
can still be very helpful, but could potentially limit the business to a
narrower avenue of growth.
Source: crmswitch.com